G20 to regulate big hedge funds: draft communique

World leaders will pledge to regulate major hedge funds for the first time and set up a new oversight board to monitor the global financial system, according to a draft of the G20 communique.

The draft, obtained by Reuters from delegation officials at the G20 summit, also said leaders would vow to cooperate over economic policies to restore global growth and refrain from competitive devaluation of our currencies.

Leaders of the world's largest industrialized and emerging economies are due to finalize their plan for reviving growth and stabilizing the financial system at a summit here in London on Thursday.

Missing was toughened language on tax havens, which France and Germany have sought where locations would be named and bank assets there revealed.

The draft communique would strengthen the authority of the International Monetary Fund, giving it more responsibility for overseeing the world economy and making sure that crises do not erupt in the future.

New resources would be made available to bolster the IMF's war chest and its quasi-currency called Special Drawing Rights would be expanded. But specific figures were not included in the draft.

The outlines of a new global financial architecture were there, with a new Financial Stability Board to replace the Financial Stability Forum, which would work with the IMF on overseeing the world economy and financial system.

The communique made five pledges -- to restore growth and jobs; repair banks and lending; strengthen global financial institutions to deal with the crisis and prevent future ones; to promote global trade; and to build a sustainable recovery.

By acting together to fulfill these pledges we will bring the world economy out of recession and prevent a crisis from recurring in the future, according to the draft.